Assets reported on the balance sheet include:
A) Accounts Receivable, Sales Revenue, and Cash.
B) Equipment, Supplies Expense, and Cash.
C) Accounts Payable, Retained Earnings, and Cash.
D) Accounts Receivable, Equipment, and Cash.
Which of the following would not be considered an operating activity?
A) Pay employees for work completed
B) Purchase supplies on account
C) Purchase equipment for cash
D) Sell goods to customers
Use the information above to answer the following question. Which of the following is
the journal entry that will be used to record activity #4?
The following account balances are taken from the December 31, 2015, financial
statements of ABZ Advertising Company. The company uses accrual basis accounting.
The following activities occurred in 2016:
1) Performed advertising services on account, $55,000.
2) Received cash payments on account, $10,400.
3) Received deposits from customers for advertising services to be performed in 2017,
$2,500.
4) Made payments to suppliers on account, $5,000.
5) Incurred $45,000 of operating expenses; $39,000 was paid in cash and $6,000 was on
account and unpaid as of the end of the year.
A) Debit Operating Expense and credit Cash for $5,000
B) Debit Accounts Payable and credit Cash for $5,000
C) Debit Accounts Payable and credit Operating Expense for $5,000
D) Debit Cash and credit Accounts Payable for $5,000
An understatement of the ending inventory balance will cause:
A) Cost of goods sold to be overstated and net income to be understated.
B) Cost of goods sold to be overstated and net income to be overstated.
C) Cost of goods sold to be understated and net income to be overstated.
D) Cost of goods sold to be overstated and net income to be correct.
The following information was available to the accountant of Horton Company when
preparing the monthly bank reconciliation:
The amount of cash that should appear on the balance sheet following completion of the
reconciliation and adjustment of the accounting records is:
A) $660.
B) $640.
C) $620.
D) $305.
Countryside Corporation provides $6,000 worth of lawn care on account during the
month. Experience suggests that about 2% of net credit sales will not be collected. In
conformity with the expense recognition principle, the company should:
A) record an estimate of Bad Debt Expense in the same period as the lawn care is
provided.
B) not report the sales revenue until it collects payment.
C) increase the value of its liabilities with an adjustment.
D) wait until the accounts are determined to be uncollectible before making an entry to
record the related Bad Debt Expense.
A company sells 1 million shares of common stock with no par value for $15 a share. In
recording the transaction, it would debit:
A) Cash and credit Additional Paid-in Capital for $15 million.
B) Cash and credit Common Stock for $15 million.
C) Common Stock and credit Cash for $15 million.
D) Common Stock and credit Additional Paid-in Capital for $15 million.
A company has total revenue of $560,000 and total expenses of $330,000. If the
company overstates sales by $10,000, what is the effect on the company’s net profit
margin?
A) Net profit margin would be overstated.
B) Net profit margin would be understated.
C) Net profit margin would be unaffected.
D) Net profit margin cannot be computed because overstating sales is unethical.
How competitors calculate depreciation is most likely to affect comparisons between
competitors if property, plant and equipment:
A) makes up a large percentage of assets and average useful lives are fairly different.
B) makes up a small percentage of assets and assets are financed in a different way.
C) makes up a small percentage of assets and average useful lives are fairly similar.
D) is primarily leased in the industry, not purchased.
Use the information above to answer the following question. What is the entry to record
the payment of interest at the maturity date of the note?
A) Debit Notes Payable for $50,000, debit Interest Expense for $4,500, and credit Cash
for $54,500
B) Debit Interest Payable for $1,500, debit Interest Expense for $750, and credit Cash
for $2,250
C) Debit Interest Expense for $2,250, and credit Cash for $2,250
A) Debit Interest Expense for $2,000 debit Interest Payable for $2,500, and credit Cash
for $4,500
EBITDA is equal to which of the following?
A) Net income – Interest expense – Income tax expense – Depreciation expense –
Amortization expense
B) Net income + Interest expense + Income tax expense + Depreciation expense +
Amortization Expense
C) Operating income – Interest expense – Income tax expense
D) Operating income + Depreciation expense + Amortization expense
A company has a debt-to-assets ratio of 0.45. If the company then borrows cash from
the bank to finance a building acquisition, which of the following is a correct
statement?
A) The debt-to-assets ratio will be unchanged.
B) The debt-to-assets ratio will increase.
C) The debt-to-assets ratio will decrease.
D) The debt-to-assets ratio will increase as a result of the cash received and then
decrease as a result of the building acquisition.
The selected financial information set forth below was summarized from the most
recent income statements and balance sheets of the Pixel Company.
Required:
Part a. Determine the company’s receivables turnover during Years 2 and 3.
Part b. Determine the company’s days to collect during Years 2 and 3.
Part c. Interpret the results of this analysis.
The statement of cash flows shows the following information:
· Cash provided by operating activities of $16,500
· Cash used by investing activities of $8,400
· Cash used by financing activities of $2,900
The beginning cash was $14,000. What is the amount of cash at the end of the period?
A) $41,800.
B) $30,500.
C) $8,800.
D) $19,200.
A debt-to-assets ratio of 0.50 indicates that the company has:
A) more liabilities than stockholders’ equity.
B) equal amounts of liabilities and stockholders’ equity.
C) more stockholders’ equity than liabilities.
D) no liabilities.
Which of the following would cause the greatest increase in a company’s inventory
turnover ratio?
A) Keeping the same amount of inventory on hand while unit sales are increasing
B) Increasing the amount of inventory on hand while unit sales are increasing
C) Keeping the same amount of inventory on hand while unit sales are decreasing
D) Decreasing the amount of inventory on hand while unit sales are increasing
Which of the following is not a profitability ratio?
A) Return on equity (ROE)
B) Earnings per share
C) Fixed asset turnover
D) Days to sell
Which of the following types of items would you be most likely to see below the
income tax expense line on an income statement?
A) Gain on Sale of Discontinued Operations, Net of Tax
B) Gross Profit
C) Cumulative Effect of Accounting Change
D) Salaries Expense
Your company purchases $50,000 of inventory from a wholesaler who allows you 45
days to pay. In addition, the wholesaler offers a 3% discount if payment is made within
12 days. These payment terms would be expressed as:
A) 0.03/12, n/45.
B) n/45, 3/12.
C) n/45, 0.03/12.
D) 3/12, n/45.